Tesla wins case against Ontario government over electric vehicle rebates

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Ontario's Progressive Conservative government says it is reviewing the court ruling

Hailey Salvian - CBC News

August 28, 2018

A parking lot of predominantly new Tesla Model 3 electric vehicles is seen in Richmond, Calif. The automaker hailed the Ontario Superior Court of Justice decision and called on the government to provide electric vehicle customers with the previously promised incentives. (Stephen Lam/Reuters)

Ontario Superior Court Judge Frederick Myers ruled Monday that the provincial government's decision to exclude Tesla from a grace period for an electric vehicle rebate program was arbitrary and had singled out Tesla for harm.

The ruling requires the government to review the program so that it includes Tesla or provides adequate justification for the company's exclusion.

A spokesperson for Attorney General Caroline Mulroney said the government is "reviewing the ruling and will make a decision on how to proceed in the coming days."

Sara Singh, the Ontario NDP critic for the Ministry of the Attorney General, said in a statement that the decision means Premier Doug Ford is sticking people with the bill for his torn up contracts and cancelled programs.

"This is likely only the first of many decisions against the Ford government's decision to rip up hundreds of cap-and-trade and green energy contracts," she said.

It's not yet clear, however, what the government will have to do in response to the decision.

'Factual assumptions'

In mid-August, Tesla Canada filed a suit against the provincial government alleging it has suffered "substantial harm" and lost sales following the cancellation of an electric vehicle rebate.

The lawsuit came after a decision by Ford to scrap the province's Electric and Hydrogen Vehicle Incentive Program (EHVIP) launched by the previous Liberal government. The program offered rebates of up to $14,000 on qualifying vehicles.

When it cancelled the EHVIP, the province promised to honour the incentive for those who have their vehicle delivered, registered and plated if it was purchased from a dealer before Sept. 10. But the province said the incentive would end immediately for anyone who ordered their vehicle directly from the manufacturer, which impacted Tesla customers.

Tesla Canada filed a suit against the Ontario government following the cancellation of an electric vehicle rebate. (Stephen Lam/Reuters)

In its lawsuit, filed with the Ontario Superior Court of Justice, Tesla Canada — which said it is an Ontario-licensed dealer — said its customers no longer qualify for an incentive, unlike those buying electric vehicles from other companies.

Tesla Canada argued the government "deliberately and arbitrarily" excluded its customers, while providing no warning or the chance to offer any input.

"The [Government of Ontario's] asserted rationale for limiting the transition program to franchised dealerships is laden with factual assumptions that were susceptible to being proved or disproved with evidence," Justice Myers wrote in the court's decision.

'I felt really left out'

For Tesla buyers like Calvin Kimura, the court decision is a win against the PC's cuts to green energy programs but still leaves a lot of confusion.

He said now that the rebate is in limbo he doesn't know what to do about his Tesla order.

"Fourteen-thousand isn't a small sum of money," he said in an interview with CBC News after hearing the court decision.

"I've been trying to make my decisions accordingly and it's getting tiresome.... I just need to know if I'm going to get [a rebate] or not."

Kimura said "it was a big shock" when he first heard he wasn't eligible for the rebate under the government's new rules.

"I felt really left out, especially because I knew every other manufacturer was allowed to give the rebate to their customers," he said. "I felt like I was being targeted."

Tesla CEO defends retail model

The Ontario case comes as Tesla struggles to move ahead with its retail model in the U.S. where it has not used franchised dealerships.

Numerous U.S. states including Michigan, New Jersey and Missouri have passed laws in recent years to prevent Tesla from selling vehicles directly to consumers following pressure from automobile dealership associations.

Tesla CEO Elon Musk has staunchly defended the direct retail model.

Tesla CEO Elon Musk has defended the company's business model that does not use franchised dealerships. (Kiichiro Sato/Associated Press)

Musk said in a blog post that franchised dealerships don't have enough incentives to sell electric cars and that the company needs to place its sales venues in areas where it can attract foot traffic and educate potential customers.

Tesla said it had 600 active customer orders when the government ended the program in July. At the time, the company had 34 unallocated vehicles on its lots plus 319 in transit on trains and trucks. The company said 175 customers had cancelled their orders since the program ended.

The Ontario PCs said they had specified only franchised dealerships were eligible for the rebate extension to help protect small- and medium-sized businesses that may have been hit by the program.

Tesla responded that many franchised car dealerships in Ontario are owned by large businesses that own numerous franchises.

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